What is a "rate lock period"?
What is a Rate Lock?
When you're promised a "rate lock" from the lender, it means that you are guaranteed to keep a certain interest rate for a certain number of days for the application process. This ensures that your interest rate cannot go up as you are working through the application process.
Rate lock periods can be various lengths of time, anywhere from fifteen to sixty days, with the longer period usually costing more. The lender may agree to hold an interest rate and points for a longer span of time, say 60 days, but in exchange, the rate (and sometimes points) will be higher than that of a rate lock of a shorter period.
More Ways to Get a Great Interest Rate
There are more ways to get a lower rate, in addition to agreeing to a shorter rate lock period. A bigger down payment will result in a lower interest rate, since you are starting out with more equity. You could choose to pay points to lower your rate over the loan term, meaning you pay more up front. One strategy that makes financial sense for some is to pay points to bring the rate down over the life of the loan. You pay more initially, but you will come out ahead, especially if you don't refinance early.
Coleman Mortgage Company can walk you through the pitfalls of getting a mortgage. Call us: 972-932-9083.